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What is credit rating:
Any form of debt has to be repaid. Before you lend money, you will want to do a background check on the borrower’s ability to repay, ability, and willingness to repay the loan. In other words, this background check is done to test the credibility of the borrower.
Some famous credit rating agencies:
Globally, India has three renowned credit rating agencies:
- Standard & Poor’s
- Moody and fitch
- ICRA, CRISIL, CARE
On what basis is the credit rating assigned?
- These agencies provide ratings to debt issuers, such as companies and governments.
- To get into credit ratings, agencies not only evaluate current and historical information.
- While granting credit rating to a country, political stability, monetary stability, focus on the impact of global events on the country.
A good credit rating should be attractive, yet direct and up to the point.
It is important to remember:
- Credit ratings reflect the strongest opinion about a borrower’s credit rating, from strongest to weakest.
Different credit rating agencies may provide different credit ratings based on the company’s analysis.